The major weakness of AP is that it needs to establish a long term security of supply through access to native forests. The other major problem is that in Australia at the present time there is a lack of pulp and paper capacity, and lead times of between 2-3 years are required to build new facilities. This restriction has resulted in increased imports to meet the strengthening demand in paper. AP recently announced initiatives to increase its use of wastepaper in existing paper production. This has been decided so that virgin fibre can be freed up for use in a new fine paper machine. AP are also looking at feasibility studies for a linerboard mill in Malaysia and another linerboard mill in Europe.

Pollution at Papermills

AP's Maryvale mill is an "integrated pulp and papermill which chlorine bleaches eucalypt and softwood pulp to make printing and writing papers, packaging and liners". (29) The quality of effluent is monitored daily and must fall within specified limits. In 1995 there were thirty-two breaches of limits.(29) There were twenty-seven odour complaints in 1995.(29)

The Burnie mill uses Bleached Eucalypt Kraft pulp to make printing and writing papers. Discharges of organochlorines are high, averaging more than ten times the recently revised limits for new pulp mills set by the Commonwealth government. Another environmental problem is one of aesthetics, relating to the discolouration of the recipient waters close inshore and the stranding of stable foam on the beach.(29) Ninety per cent. of solid waste produced by the mill is sent to landfill.

The Wesley Vale mill uses mechanical pulping and produces lower quality printing and writing papers. There are localised effects on the biota living near the discharge point, principally in terms of relatively high biomass but low species diversity. The main environmental detriment is aesthetic, relating to the discolouration of the waters inshore.(29)

AMCOR were ordered to pay $5,000 in costs to the Environment Protection Authority in April 1996 and placed on a 12 month good behaviour bond over a 16 000 litre oil spill from the Brooklyn fibre packaging plant in Melbourne. Oil made its way into Stony Creek and the company were charged by the EPA with water pollution harmful to aquatic life.(33)

In 1991 Brown and Dureau, who were taken over by APM in 1979, were restructured and renamed AMCOR Trading. This sale included the sale of B&D's paper merchanting and stationery manufacturing to Spicers.

During the year 1994-5 sales from merchanting activities, AMCOR Trading and Spicers Paper rose 24% to $1919 million.(2) Profits rose 78% to $82 million.(2) This increase has in part been caused by rising paper prices in 1994-5. Higher paper prices are regarded very positively amongst Australian Paper merchants because they increase the value of their holdings, reduce price competition amongst paper merchants and make them more competitive with Asian manufacturers.

The APPM merchants (Daltons, The Paper House and Tomasetti) will all benefit from reduced costs and restructuring by AMCOR through warehouse rationalisation and technology. At present AMCOR has about a 74% interest in the Australian Paper Merchanting Industry.

Paper distribution activities have been purchased as production of fine papers has grown. Papers distributed are specific to fine papers, and supply is from AMCOR operations and, for specialist grades, from foreign mills.

Paper Merchanting

Most paper merchants are now overstocked as they built up stock in 1995 in order to beat price rises. It could take until mid 1996 for the excess to work out of the system.

AMCOR's paper merchants are:

Spicers Paper
AMCOR now holds a 42% interest in Spicers Paper, however AMCOR have recently decided to discontinue the consolidation of Spicers. Spicers market a full range of paper and are also involved in converting. Spicers purchased 85 000 tonnes of paper in 1993-4.

Dalton Fine Paper
Full range merchant who stock a variety of imported and local grades. Printing, publishing and paper conversion. Purchased 58 000 tonnes of paper in 1993-4.

The Paper House
Specialty and commodity products for printing and office market. Purchased 65 000 tonnes of paper in 1993-4.

Tomasetti Paper
Leading importer of specialty and coated papers for printing industry. Purchased 6 000 tonnes of paper in 1993-4.

AMCOR Envelopes
Celpac and Envelope Manufacturers. Celpac makes and markets stock envelopes to the stationery industry and Envelope Manufacturers makes over printed envelopes for government and business. These two businesses had been run by NBH until AMCOR's takeover of APPM in 1993. Shoalhaven purchased 30 000 tonnes of paper for the use of envelopes in 1993-4, before being taken over by AMCOR in 1994. A 100% recycled envelope was launched by AMCOR in 1991.

During 1994-5 AMCOR Trading brought Paper Products Marketing (June 94) and in August 1995 acquired Zimmerlund, a Norwegian based paper trading company, which represents U.S. and European paper producers in Asia and Australasia.(2) Both these acquisitions give AMCOR Trading access to new markets and AMCOR are looking at further acquisitions in this division as paper trading activities are expanded in offshore markets (source from Europe, North America and selling into Asia). AMCOR Trading worked at building a network throughout Asia.

AMCOR's paper merchanting division no longer controls Spicers, however by staying in the merchanting area, AMCOR retains a degree of influence over prices charged. AMCOR has its own merchants because it gives them a ready market and allows them to increase their volume of paper production.

KCA have operated in Australia in conjunction with AMCOR since 1963 and in New Zealand since 1991. Their main plant is based at Millicent in South Australia. In 1989 KCA opened their new mill at Lonsdale which greatly increased capacity and soon after was exporting nappies to South East Asia.(7)

Profits during 1994-5 rose by 9% to $560 million.(2) A full year dividend of $21.9 m was paid to AMCOR.(2) KCA has increased market share in Australia and New Zealand (particularly for nappies) and benefited from an increase in tissue prices.

KCA holds about 65-70% of the market for disposable nappies in Australia (34) and about 25% in New Zealand. Market analysts believe that sales of nappies represent about 38% of total KCA sales and 60% of profits. In 1993 it was estimated that 670 million disposable nappies were sold in Australia, almost a 50% increase since 1988.35 KCA's main competitor in facial and other tissues is Bowater-Scott (a fully owned subsidiary of Bowater (US)) who have about 28% share of the entire tissue market.

KCA brand names include Huggies, Kleenex, Ultrasorb, Kotex, Wondersoft, Medesa, Delsey, Kleenex VIP's and Snugglers. KCA also make paper towels, adult incontinence, health care products, feminine pads, industrial wipes and workwear. Huggies is KCA's main generator of sales. Market share increased from 5% in 1988 to 42% in 1993.The brand has been advertised consistently, with an annual media ad budget of $3.5 - $4.5 million.35

Market experts state that the total number of nappies consumed in Australia is more than 700 million, servicing the country's 250 000 new births each year. This market has increased significantly since the late 1980's and KCA's prospects are expected to grow by 8-10% per annum for the next few years. KCA's biggest competitor in the nappy market is APPP, owned by the Hong Kong based DSG Group. APPP is an importer of all its product.

In 1990 in a massive redevelopment, KCA eliminated chlorine bleaching at the mill and replaced it with the hydrogen peroxide process.38

Nationally, KCA employs 2,000 people. It plans to plant 8 million blue gum trees in South Australia and Victoria for future uses.(39) Eucalypt plantations were started around Mount Gambier in the early 90's.

KCA claim that they are self sufficient for all pulp requirements, most of which come from radiata pine plantations in South Australia, yet 45, 000 tonnes of hardwood from the Otways region in southern Victoria will be transported to KCA in 1996. This will be reduced to 32,000 tonnes for the next year.(40)

The Otway Ranges, situated 200 km west of Melbourne and adjacent to the coast, were first logged at the turn of the century. According to the Otways Forest management plan, over 85% of the total weight of timber being taken from the Otways region is going to Kimberly Clark in South Australia. Kimberly Clark recently gained headlines in the US for its takeover of US giant Scott Paper, making it one of the world's biggest wood fibre product companies.(41)

Much of the forest in the Otway Ranges has been gazetted for water catchment. Water from the Otways supplies Geelong, Ballarat, Warnambool, Colac, Apollo Bay, Lorne and other coastal and inland towns in the Otways and Surf Coast regions. Logging is not excluded from all of the water catchment area - 50% of logging is taking place in gazetted water catchment. In February of this year, local residents were shocked to discover a huge land slip into the headwaters of the East Barham river. Local resident , David Butt was quoted as saying in the newspaper: "This massive landslide, which almost constitutes a tourist attraction, has occurred because The Department of Conservation and Natural Resources turned a little four wheel drive track, named HP, into a logging super highway. The fragile little ridge, however, could not handle the disturbance and collapsed."41

The Otway ranges are currently experiencing a massive outbreak of Myrtle wilt, a wind bourne native fungus which attacks Myrtle beech (Nothofagus cunninghamii) trees, the dominant species in Otways rainforest. The fungus (Chalara australis) enters the tree through a wound. Research carried out in Tasmanian rainforest strongly suggests a connection between logging and the spread of Myrtle wilt.41

The usage of recycled fibre by the Australian pulp and paper industry has risen from 38% of fibre content in 1980 to 48% in 1993-4. This is expected to rise to over 50% by 1996. Virgin Fibre (domestic non plantation sources) represents 15%, imported fibre 10% and plantation virgin fibre 27%.42

Australian Paper aims to increase its share of the Australian market and upgrade four paper machines to increase capacity. AP will bring on line the Fairfield mill recycling centre to process office paper, newspaper and magazines and is undertaking a major feasibility study to determine a development plan for the fine papers business, including paper making and pulping capacities.43

By May 1996 AMCOR should be opening a new $50 million recycling centre at the Fairfield mill. It will be targeting white waste paper, approximately 60 000 tonnes a year. Part of the pulp will be used for paper. This is part of a $152 million investment into recycling which will increase the amount of recycled paper and cardboard a year in Australia by 105 000 tonnes.43

The Commonwealth government accounts for as much as 10% of paper use in Australia. In 1994, then Prime Minister Paul Keating announced that by 1996 90% of Commonwealth paper would come from recycled sources. The Environment Protection Authority (EPA) was commissioned to facilitate this process. As a result of submissions from the Pulp and Paper Manufacturers' Association of Australia (of which AMCOR is a member), the EPA altered definitions to include "environmentally preferred" paper, including plantation fibre and fibre sourced from native forests.24 Eventually, the entire process was ditched and a major initiative that could have boosted the recycling industry was lost. Commonwealth consumption of native forest-based paper continues.

In 1995, Australia's nascent recycling industry lost further ground with the ending of sales tax exemption for recycled paper.

APM Forests Pty Ltd.

1970's

APM in 1970 formed a wood products division and the two new subsidiaries were established to handle sawmilling and wood products. They were Integrated Forest Products Pty Ltd in 1970 (55%) and APM Wood Products Pty Ltd in 1972.6 Integrated Forest Products was a partnership in the ACT with the sawmillers Duncan's Holdings Pty Ltd and Hancock Bros Pty Ltd, plywood manufacturers, who became wholly owned by APM in 1975.6 APM also took over sawmills including Waygara sawmilling Pty Ltd which operated two mills in East Gippsland at Waygara and Nowa Nowa and the Victorian Hardwood Co Pty Ltd, in Powelltown.6 APM also took over Smith Bros who operated five pine sawmills and a box factory in NSW. The Waygara mill closed in July 1990 and the Canberra plywood plant closed in December 1990, due to increased imports of Radiata Pine from New Zealand.

APM Wood Products acquired Builco at Scoresby, a manufacturer of roof trusses for home and industrial building. Another plant was built at Campelltown (NSW) although these plants were later transferred to a later APM acquisition Brown and Dureau Ltd.6

1980's

By 1981: "APM makes about 3/4 of the packaging paper and board required by Australian industry."47

By 1984 APM Forests Pty Ltd held 126 000 hectares of freehold and leasehold land, of which 83 000 hectares was either natural forest or established plantations. APM also used "super trees" grown from genetically improved seeds, which obtained a yield 60% higher than earlier plantations.

"APM has negotiated with the Victorian government for a significant supply of wood from government sources after the year 2000 to supplement internal supply and meet projected pulp supply"48

These supply agreements were the updating Forest (Wood Pulp Agreement) Act 1981 which was a supplement to the Forests Act 1961. It had been updated in 1966 and the 1984 supplement agreed to by the then Labor government stated that the Forestry Commission:
"was bound each year to make available to the company from areas of forest as provided . . . minimum annual supply of pulpwood which shall be, during the years 1984-5 to 1997-8 inclusive - 320 000 cubic metres and during the years 1988-99 and each year thereafter 370 000 cubic metres. The act provided that a) the commission shall make available from mountain forests not less than 45% of the minimum annual supply of pulpwood each year, b) the commission shall make available from the mill area each year not less than: i) 93 000 cubic metres of pulpwood from mountain forests, ii) 73 000 cubic metres from mixed forests."49

As well as this agreement the Victorian Government in 1985 also signed the Forest (Wood pulp Agreement) Amendment No. 10234, which was supplemental to the Softwood Timber Agreement. In this agreement the:
"Victorian government provided a total of 200 000 cubic metres of softwood timber per annum from the first day of July 2004 for a period of 20 years to the 30th day of June 2024 where AMCOR will pay commission amount of $110 000 and 3 successive annual instalments being one third of a royalty surcharge of 21 cents per cubic metre on 4 000 000 cubic metres of softwood timber" 50

A new Wood Pulp Agreement Bill was passed with Labor and Liberal support in 1996. Under this agreement the current 500,000 tonnes of pulpwood sourced from the Central Highlands will be reduced by 50,000 tonnes every 3 years to 350,000 tonnes73.

1990's

By the early 1990's AMCOR was still the largest forest plantation owner in Australia, a position it had held for over 40 years. AMCOR's plantations were by the late 80's well into their second rotation. These plantations were achieving high rates of growth due to tree breeding research to generate superior trees with improved yields and resistance to disease and drought.

"Genetically superior trees have been selected and are providing the next generation of improved plantations. APM is at the forefront of biotechnology, with the first field trials of tissue cultured eucalypts established during the year."

"During the year Calgene Pacific, in which AMCOR has a minor shareholding, successfully isolated the gene responsible for the blue colour in flowers... Calgene is also assisting APM Forests in the more efficient propagation of elite tree species..." including genetically engineered insect resilient eucalypts.8

In 1991 the AMCOR Research and Technology Centre investigated alternatives to woodpulp as sources of fibre. They worked with CSR with bagasse in North Queensland as a supplementary bleached fibre source and on behalf of the Northern Territory government with Kenaf as a supplementary fibre source. Unfortunately, a utilisation programme for these fibres has not been implemented.

During 1991 APM Forests discontinued the use of 1080 poison to control "browsing" of newly planted seedlings by native animals.(9)

At this time APM along with North Broken Hill were undertaking feasibility studies for a pulp mill near Orbost based on resources of the East Gippsland forest.(51) AMCOR were also vocal in their opposition to clearing controls and bans on National Estate logging.

"In November 1989 the Victorian Government introduced draft legislation preventing the clearing of native vegetation. This restriction is preventing the rejuvenation of land from low grade use to productive plantation forestry. We have applied for the exemption of our regrowth forests."(7)

"The governments' decision to ban logging in National Estate areas of East Gippsland, contrary to its own Timber Industry Strategy, also is of great concern. Much of the pulpwood supplied to the Maryvale Mill by the Department of Conservation and Environment is sourced from areas nominated for National Estate."(7)

Also at this time the EPA targeted the Maryvale and Fairfield mills, and as a result of these actions Maryvale did reduce organochlorine emissions and eliminated a high percentage of measurable dioxins in bleached paper products and effluents.

"A number of current or impending government initiatives may influence forestry operations in Central Gippsland where APM has an important source of pulpwood... These initiatives include the Leadbeaters Possum Draft Management Strategy, Victorian controls on native vegetation clearing, expanded use of planning schemes to control timber crops..."(8)

It came as no surprise in 1991 to see APM lobbying to get resource security legislation passed through federal parliament:
"APM has increased the pressure for laws guaranteeing timber supplies from forests, saying it will not go ahead with a $700m expansion at its Maryvale Mill without Common-wealth Legislation."(52)

"In Victoria, APPM and APM cancelled plans to build a mill in Orbost, costing $1.2 b, but are considering an $800m expansion of the Maryvale mill. Both companies cited the failure of the Hawke government to provide adequate logging resources. General manager of the APM mill at Maryvale Ian Howard stated that 'we need guarantee for the next 30 years'."(52)

After the APM takeover of APPM in 1993, AMCOR once again became involved in Tasmanian forestry issues. With the opening of the Hampshire mill in 1995 in the state's north west, AMCOR became associated with the debate over the destruction of the Tarkine Wilderness.

"The Burnie pulp and paper mill, now owned by AMCOR has first call on the Hampshire chips. It will consume 60% of production, the Wesley mill 15% and the remainder will be exported."(53)

In a comment that in our opinion may imply that AMCOR uses woodchips containing rainforest species supplied by North Ltd, the minutes of the Burnie Mill Community Advisory Committee (21/2/96) state:
"The Mill preferred a supply consisting entirely of Eucalypt chips and that any other tree species were undesirable from a product quality requirement. However, Norths (sic) were unable to guarantee a 100% Eucalypt source."(54)

In our opinion, there is little doubt that without AMCOR support at this time, the economic viability of the Hampshire mill would be dubious.

AMCOR have also been involved in negotiations in joining the $1.2 billion northern pulp mill project. Talks were held:
"with project proponents Taiwan Pulp and Paper Corporation... Mr MacFarlane said the establishment of a pulp mill in northern Tasmania could secure the future of AMCOR's two Australian paper mills at Burnie and Wesley Vale. AMCOR was looking at developing its Australian Paper Mills at Burnie and particularly Wesley Vale for its coated paper operations, which could mean future investment options". (55)

Since 1993, AMCOR have spent over $100 m, expanding production at the Burnie pulp mill, increasing its self sufficiency and improving the mill's effluent.(56)

By the mid-nineties AMCOR was still very dependent on their access to native forests, even if that dependency may have been detrimental other industries: "Around 40% of the Maryvale mill's mountain ash timber resource comes from the Thomson catchment. It is a relatively short distance from the mill which provides the company with an internationally competitive edge. A competitive edge which would be lost if the catchment was to be closed to logging."(57)

A report by economists (Read and Sturgess) found that the water lost through logging in the 48 000 ha Thomson catchment was worth more than the timber. This report presented a clear case for either a dramatic reduction to logging in the Thomson, or a total stop to logging. A second report was commissioned by DCNR:
"The second report a much tougher study, with water valued at a fraction of its value in the first study, and with timber and water values [was] based on fundamentally different assumptions. The radically different valuation of water compared to timber is where the Tasman Institute made their mark. Nevertheless, the clear finding of this report is that the current pattern of logging in the Thomson is - with a couple of ridiculous exceptions - the worst thing you could be doing."(58)